NHE卫 CONOMIC JOURNAL MARCH unit increment of output actually produced. Circulating and fixed capital are lumped together 1(a) is a truism, depending on the proposition that actual saving in a period(excess of the income in that period over consumption)is equal to the addition to the capital stock. Total saving is equal to ro. The addition to the capital stock is equal to Cp(i-wo This follows from the definition of C. And 发b Cp(a G is the rate of increase in total output which actually occurs; Cp is the increment in the stock of capital divided by the increment in total output which actually occurs, If the value of the incre- ment of stock of capital per unit increment of output which actually occurs, Cp, is equal to C, the amount of capital per unit increment of output required by technological and other conditions(including the state of confidence, the rate of interest, ete. )then clearly the increase which actually occurs is equal to the increase which is justified by the circumstances. This means that, since Cp includes ll goods(circulating and fixed capital), and is in fact production minus consumption per unit increment of output during the period, the sum of decisions to produce, to which g gives expression, are on balance justified-i.e, if C=Cp, then G= Ge, and(from 1(a) above) This is the fundamental equation, stated in paragraph 4, which determines the warranted rate of growth. To give numerical alues to these symbols, which may be fairly representative of odern conditions: if 10 per cent. of income were saved and the capital coefficient per annum(C) were equal to 4, the warranted rate of growth would be 2 per cent per annum It may be well to emphasise at this point that no distinction is drawn in this theory between capital goods and consumption good In measuring the increment of capital, the two are taken together the increment consists of total production less total consumption Some trade-cycle theorists concern themselves with a possible lack of balance between these two categories no doubt that has its importance. The theory here considered is more fundamental or simple; it is logically prior to the considerations regarding lack